The Stabilize Protocol is a decentralized finance application designed to help keep stablecoins and BTC proxy tokens prices stable by rewarding depositors with STBZ tokens and by using active strategies to balance coin demand. Users have the option to swap pools manually to achieve a higher rate of reward or deposit into the active strategies that swap tokens on their behalf.
The team actively monitors the latest developments in stablecoin advances and plans to integrate those that can help bring more value to the platform.
Currently most stablecoins in existence remain stable via their connection to an asset. This can be a real world asset such as USD with USDT and USDC, a cryptocurrency asset such as ETH with DAI or a synthetic asset with sUSD. These type of stablecoin systems have shown resilience over the years but are still vulnerable if the assets they are linked to fail or if they lose their connection to the assets. Seigniorage tokens are a new type of stablecoin that tries to remain stable around their peg without needing to be asset-backed.
What is a seigniorage token?
Seigniorage tokens are tokens that increase or decrease their supply based on the token price determined by a price oracle. When the price is above the target price, the token DAO mints new tokens to DAO participants, LP providers and coupon holders, hence why these tokens are called seigniorage, where governance gets the minting tax. As the supply increases, the price is expected to drop.
When the price is below the target price, the token DAO makes available coupons or bonds that can be purchased with tokens at a discount. The tokens are then burned to decrease the supply. As the supply decreases, the price is expected to rebound. Coupons have expiration dates so they are the riskiest part of the process but also the most important. It can almost go without saying that these tokens are experimental so use caution before getting involved.
Unlike other dynamic supply tokens (i.e. rebasing), wallet balances for seigniorage tokens do not change in amount unless you participate in the DAO thus giving peace of mind to passive holders. We at Stabilize see promise in these type of tokens.
The Stabilize strategy
As Stabilize is a platform to help promote the peg of stablecoins, we can do that with seigniorage tokens as well. Because these tokens can have wild price swings above and below their target pegs, the strategy takes advantage to profit from the swings. In this strategy, depositors can earn in both expansion and contraction phases.
Depositors can wrap three different types of seigniorage tokens into the interest earning zs-SGR tokens. These tokens are ESD, DSD, and BAC. In this strategy, when deposited, the tokens are considered equal in value to each other. Tokens are then sold against each other using Uniswap to increase the total amount of tokens.
To redeem your share of tokens back, just unwrap zs-SGR and you will receive a certain amount of seigniorage tokens back, in whichever asset has the largest balance first then other assets sorted by their decreasing balance. This means if you deposit 1000 ESD to get zs-SGR, when you redeem your zs-SGR back for seigniorage tokens, if DSD has the largest balance, you will redeem DSD first; however, the total quantity of tokens redeemed will never be smaller than what you put in. So you will get back at least 1000 seigniorage tokens. To swap redeemed tokens for any other coin, just simply go to Uniswap.
Trade executors can earn 10% profit off each trade by timing the trade at the right time. The expectedProfit(bool inWETHForExecutor) function now includes a boolean that allows executors to see their WETH profit from the next prospective trade, instead of total profit (in tokens) for the trade.
Use this now and start earning
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